Discovery: Little exposure to failed Abil

Companies / 3 September 2014, 11:36am

Reuters

African Bank head offices in Midrand.photo by Simphiwe Mbokazi 453

Johannesburg - Health insurer Discovery said it had only limited exposure to failed African Bank Investments (Abil) as it reported an expected 20 percent jump in headline full-year earnings on Wednesday.

Abil was rescued in a R17 billion bailout led by the central bank last month after being hit by waves of bad debt as its core market of low-income borrowers failed to pay back loans.

“Discovery is only effected through indirect money market and equity unit trust investments and the exposure for shareholders and policy holders is immaterial,” South Africa's largest health insurer said in its earnings report.

Discovery said diluted normalised headline earnings increased to 595 cents a share for the year ended June from 496 cents a year earlier. Discovery had already flagged normalised headline earnings would rise by as much as 25 percent.

The company wrote new business worth 12.2 billion rand, up 15 percent.

Discovery's business model gives customers incentives to lead a healthier lifestyle by subsidising gym fees, fruits and vegetables and even refunding fuel costs to good drivers.

Betting on exponential growth for the Asian insurance industry, Discovery has entered China and Singapore, but has largely shunned Africa where incomes are still relatively low.